Common stockholders have a ____ on both income and assets of the firm.

A) preemptive right
B) residual claim
C) cumulative claim
D) proxy right
E) None of the above

Question

Common stockholders have a ____ on both income and assets of the firm.A) preemptive rightB) residual claimC) cumulative claimD) proxy rightE) None of the above

Amelie Ikirezi · Accepted Answer

Final Answer : B, Explanation :  As residual claimants, common stockholders are entitled to receive any remaining funds after all other claims have been satisfied in the event of a company's liquidation. They also receive a share of profits through dividends. However, they do not have preemptive rights to purchase additional shares before they are offered to the public, cumulative claims to receive missed dividends in future years, or proxy rights to vote on corporate matters.

Common stockholders have a ____ on both income and assets of the firm.

A) preemptive right
B) residual claim
C) cumulative claim
D) proxy right
E) None of the above

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